Section 1006.22 Unfair or unconscionable means
The following perspective was provided by Rozanne Andersen of Ontario Systems.
Section 15 USC 1692f of the Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using an unfair or unconscionable means to collect or attempt to collect any debt and by way of example, delineates several prohibited methods. In the final Rule, the Consumer Financial Protection Bureau maintains the same list of prohibited methods to collect debt but adds a challenging twist. In particular, the CFPB has introduced a new method to calculate the number of days’ notice a debt collector must provide a person before processing a postdated payment instrument or postdated check.
Specifically Section 1006.22 c) provides: Postdated payment instruments. A debt collector must not:
- Accept from any person a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector’s intent to deposit such check or instrument not more than ten, nor less than three, days (excluding legal public holidays identified in 5 U.S.C. 6103(a), Saturdays, and Sundays) prior to such deposit.
- Solicit any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.
- Deposit or threaten to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.
The final Rule’s insertion of a new calculation for the postdated payment or check notice requires debt collectors to make adjustments for weekends and public holidays. As a practical matter, this may prove to be problematic. This is because software applications understand calendar days, traditional business days, leap year calculations, days per month, daylight savings time, standard time and time zones; but rarely account for busines days and weekends on a rolling basis based on the type of notice being sent.
For reference, the new Rule adopts the list of Federal public holidays, codified at https://www.govinfo.gov/content/pkg/USCODE-2010-title5/pdf/USCODE-2010-title5-partIII-subpartE-chap61-subchapI-sec6103.pdf, as the public holidays that must be included in the postdated payment and postdated check notice:
- New Year’s Day, January 1
- Birthday of Martin Luther King, Jr., the third Monday in January
- Washington’s Birthday the third Monday in February
- Memorial Day, the last Monday in May
- Independence Day, July 4
- Labor Day, the first Monday in September
- Columbus Day, the second Monday in October
- Veterans Day, November 11
- Thanksgiving Day, the fourth Thursday in November
- Christmas Day, December 25
Snail Mail: When delivering the notice of intent to process a postdated check or payment via first class mail, debt collectors may rely on the Mail Box rule and presume delivery three days after the date of mailing. Prior to the new Rule, to ensure delivery within the seven day period beginning no more than ten and ending not less than three days prior to the date of processing, debt collectors could mail the notices between 13 and six days in advance. Under the new Rule, debt collectors will need to account for Saturdays, Sundays and public holidays when calculating the safe time to mail their postdated payment and postdated check notices.
Electronic Delivery: When delivering the notice of intent to process a postdated check or payment electronically, debt collectors will need to first obtain the consumers consent to do so in accordance with paragraph c) of the Electronic Signatures in Global Commerce Act (E-sign). After obtaining E-Sign consent with respect to the particular debt, debt collectors may send the postdated payment or postdated check notice to the consumer using the method the consumer identified, and the debt collector validated, during the E-Sign consent process.
Note however, because the Mail Box rule does not apply to the electronic delivery of digital information, debt collectors will need to work with their text and email providers to document the date and time of delivery of the email and/or URL link to the notice and the text and URL link to the notice. Absent confirmation of the electronic delivery of the notice AND confirmation the email containing the embedded notice or the URL included in the email or text message was actually accessed by the consumer, the debt collector will need to consider mailing the paper notice in a timely manner or forego processing the postdated payment or postdated check.